OATSystems Gets Venture Funding

Sep 30, 2003—. 1, 2003 – Privately held RFID software developer OATSystems has landed $11.5 million in first-round funding. The company, which has been a key technology sponsor of the Auto-ID Center, says it will use the money to grow its management and marketing teams and to develop a new tracking application.

OATSystems' Putta

"We will be strengthening our management team with a few executives who have been pioneers in both the RFID and IT worlds," says OATSystems’ founder Prasad Putta. He adds that the company will make several announcements in the next few weeks.

Two venture capital firms—Matrix Partners and Greylock—provided the funding in late September to the Watertown, Mass., startup. According to OATSystems, Matrix and Greylock invested equal amounts in the company and now both hold minority stakes in the company.

OATSystems helped develop the Savant software and the Object Name Service (ONS), two key components in the Auto-ID Center's EPC Network. The ONS helps computer systems find information about a product bearing an RFID tag with an Electronic Product Code (EPC). A Savant is middleware that processes and manages data received from RFID readers before passing information on to existing corporate and public networks.

OATSystems has been one of the fastest growing companies to emerge out of the Auto-ID Center nexus between business and academia. At MIT, Putta was a student of Sanjay Sarma, the center’s head of research. Sarma invited Putta to work on the software infrastructure for the EPC Network. When that work was done, Putta started OatSystems, which built its own product on top of the open network and has been asked by many of the Auto-ID Center sponsors to provide software for pilots. "We are already a profitable company with millions of dollars in revenue," says Putta,

Like the Savant it developed for the Auto-ID Center, OATSystems' core Senseware product is reader-independent RFID middleware. The company launched Senseware in summer 2002 to provide corporate supply chains with detailed data from the supply chain in real-time, improved processing speed through the supply chain and product security (preventing products from being tampered with, misplaced or stolen).

OATSystems says that Gilette and other paying customers are already using Senseware. A handful of other paying customers are also using the software, but have been reluctant to be named. Putta says several will go public with their RFID deployments over the next few months.

The new capital will also be used to boost sales and marketing as the company tries to leverage the success of these and other pilot customers who have moved beyond trials and are deploying RFID systems. "We are also starting to look to the international market and in particular Europe, where the more fragmented market means more major players to sell to than in the U.S.," says Putta.

In addition, the funds will go toward developing new applications to sit atop OATSystems’ Senseware and the standards-based Savant frameworks of other companies that offer comparable middleware (such as ConnecTerra, GlobeRanger and Manhattan Associates).

"The applications will be standards based, so they will be a pluggable model," says Putta. "We have been listening to our existing customers about what sort of applications they need. What is needed now is the next higher level of enterprise-wide applications."

The first of these applications, which is expected to be available commercially in the second half of next year, will help companies track and trace products. "Customers want visibility of their supply chain and to see where things are at any point in time for planning," says Putta. "Track and trace is very important for that."